Pandora, the long-standing online music service increasingly squeezed by newer competitors like Spotify and Apple Music, just made a move to reclaim its place in the music streaming game.
The company announced this afternoon (Nov. 16)—hours after rumors first emerged—that it is acquiring on-demand music service Rdio for $75 million. Rdio will shut down its service and file for bankruptcy, and Pandora will offer Rdio’s on-demand streaming platform (which lets users instantly pick what songs they want to hear) alongside its radio-style service (which plays program-selected music based on genres, or “stations”).
If all goes according to plan, Pandora’s listeners will be able to access the new feature—or what company executives call an “expanded Pandora experience”—in late 2016.
Up until now, the service has championed its radio-centered user experience as wholly unique from the other streaming services out there. But the deal fills a real need considering that Pandora saw its stock sink 40% in one day after investors got spooked over the sudden success of Apple Music, and that it currently only offers a passive listening experience, while many others—including Apple Music and Spotify—offer both.
On a conference call to discuss the deal, Pandora chief executive Brian McAndrews said Rdio’s acquisition is part of a bigger company plan to grow its user base. ”There are listeners who want to have both [on-demand and radio], so why encourage them to go elsewhere when they can stay inside Pandora?” he said.
But Pandora is stepping into the on-demand music field quite late. Spotify looks like an unbudging giant, and even Apple had to break with company tradition and broaden its service from iPhones to Android phones to compete. It’s unclear at this point how much Pandora stands to benefit from the acquisition.
McAndrews did not reveal the current size of Rdio’s user base, calling the number irrelevant since the service is shutting down.